Happy Sunday!

If you’re reading this, I hope you’re sitting comfy on a couch, feet up, and a beverage in your hand. In today’s newsletter, I go through a QBR from Meta and pull out insights that I found most interesting. It should be a fun read today :)

Summer has officially started in NYC and the weather is warm. The energy is electric in the city this time of year. I have been traveling and speaking at various events over the last 10 days. This past week I was on a panel at the OOH Media Conference in California with my friends Brian Rappaport (founder of Quan Media Group) and Ben Soffer (@boywithnojob and founder of Spritz Society). After San Diego, I went to LA to host a dinner with founders and marketers, and then a fun get-together with TryNow. Friday night was the best way to close out the trip — I went to a Shark Tank viewing party for Flaus, one of my portfolio companies that had their episode premier on Friday night and they closed a deal! Their PDP was designed by the Sharma Brands team, and it dominated with sales.

I still have a few more events that I’ll be at later this summer. If you are around, come say hello! That includes: 

  • Commerce Summit in NYC on 5/28: Commerce Summit is new, but it’s one of the best events in the space. Last year, it was invite-only, but in 2024, they are selling tickets. If you want to meet with and learn from brands doing 50M+/year, consider going here! 
  • SubSummit in Dallas on 6/17: This is THE subscription-focused conference to go to. Everyone from technology providers, consultants and brands are here, and everything is focused on driving new subscribers. Get your ticket!
  • GROW in NYC on 7/9: GROW is one of the year's go-to events. It's free to attend if you’re a brand and is always a great event, content-wise and people-wise. We’ll be throwing an invite-only event for brands the night before GROW. Stay tuned for that. Apply for a free GROW ticket!

In case you missed it, Moiz and I are now on Season 8 of Limited Supply. We just crossed 100 total episodes. It has been one of my favorite projects over the last few years. Our Slack community is still growing too. We have over 4,500+ members from all areas of commerce and business. We have dozens of CEOs and CMOs and literally thousands of brand operators who represent companies from virtually every category and role. If you want to be part of the conversation, you should join us HERE. 

Okay, for this week’s newsletter, I wanted to share some data I got from one of the brands I’m involved in. Brands in the disruptors program get a nice big QBR with Meta, and that’s where a lot of this data is derived from. Meta looks at your whole business (online, retail, external eCommerce) and aims to illustrate their overall impact, along with trends they see at Meta. This includes what they see working best, what categories of business are growing the fastest, where you can achieve lower CPMs, and how to make your overall spend with them go further.

I’m not going to share the name of the brand, for obvious reasons, but they’re a category leader and generate 9-figures of revenue per year. Okay, let’s dive in: 

The Fastest Growing Categories on Meta Today

To set the stage, Meta shared some interesting stats around the fastest growing brand categories on their platform today. This does not mean that these categories are the largest, they are simply the fastest growing in-terms of year-over-year (YoY) ad spend increases spent on the platform right now. 

#1 was pet products (or anything in the pet category).

#2 was cleaning supplies (including subscription).

#3 was kitchen items.

#1 and #3 I could have guessed but cleaning supplies surprised me. I bet brands like Blueland, Branch Basics, and others are cleaning up on the platform. When I worked with a cleaning brand in the past, I was shocked how well Meta ads performed for us.

The pets category is a no-brainer to me and I still think the space is under explored. For context, the pet product market was estimated to be around $143.6 billion in the US in 2023. This includes pet food and treats, supplies, toys, veterinary care, and other services.

Globally, the pet market was valued at $246.66 billion last year and is expected to reach $427.75 billion by 2032. The size of this market and how fast it’s growing leaves a ton of room to build omnichannel brands in the years to come.

Kitchen items was another obvious winner. Last week I wrote about HexClad and how they are on track to do $500M in topline this year.

Beyond that, the entire space has completely exploded since the COVID lockdowns. Many cookware brands are up BIG as viral cooking content has inspired everyone to cook more. Beyond pots, pans, and knives, this segment also includes kitchen appliances like toasters, ovens, crock pots, rice cookers, blenders, and air-fryers. Kitchen electronics is a massive part of the category but I think it’s a part of the space that’s very hard to disrupt given the barrier to entry and all of the legacy brands.

A Meta Performance Snapshot by Category

Meta also shared some insights based on what they are seeing for specific categories when it comes to AOVs and CVRs. Seeing this data is always helpful because if you operate a brand in one of these categories, it gives you a solid benchmark to know if you’re on the right track. 

Here’s some of what they shared: 

  • Art & Custom Frames. These brands are seeing just under 4% CVRs with AOVs of less than $100.
  • Bedding and Home Textile (This means bedding, sheets, blankets, towels, and robes, etc) These brands are seeing around a 2.6% CVR with a stronger $175 AOV.
  • Toys & Baby Goods I would have guessed baby goods were going to be one of the fastest growing categories but pets won out. This segment is seeing a 2% average CVR with $100 AOV. 
  • Kitchen items (like the ones I mentioned above) have a $200 AOV with just under a 2% CVR.
  • Rugs (another big category) saw just over a 1% CVR, and just over a $200 AOV
  • Mattresses are seeing a .75% CVR and a $850 AOV. 

CPM of a Category-Leading Brand with Brand Awareness

Again, I’ll keep these stats anonymous but I think it highlights some broader trends. For context, this brand has spent just under $7M on Meta. This is actually pretty minimal spend relative to the size of their brand.

They had a CPM of $13.50 which is low, but consistent with other fast-scaling DTC companies. Across all these reports, the brands that had great brand marketing and brand awareness had the lowest CPMs. Those who didn’t, had CPMs around $30-$70.

The Tactics that Drove Performance

Whitelist from Creator Handles

When this brand whitelisted their ads through creator handles, they saw their ROAS increase by 35%, their CPA decrease by 21% and their CPMs decrease by 29% on average. These results have been massive for them. 

I have talked about this strategy for many years and it still works today. 

What this means is that instead of running ads through their native brand accounts on Instagram and Facebook, they ran their ads through another creator’s IG or FB handle. 

To do this well, they often partnered with these creators to generate custom ad creative that featured the person they were whitelisting from. 

Whenever I want to do this for a brand, here’s how I think about it: 

  1. I make a list of potential creators who I think have a solid “product/audience fit” for the niche I’m going to be marketing in. I will categorize this list by follower count and engagement rates and then stack rank the ones I want to go after first. I will have my team reach out to them directly on the channel we want to whitelist from. This could be Facebook, IG, or TikTok, etc. 
  2. Next, I will ask that creator to make a sponsored post about the brand. I will pay their normal content/collab rate and ask them to create something that fits their normal content style while integrating the product. This is typically a review, unboxing, before and after, a comparison video or another kind of product in use post. If I reach out to 20-30 creators, I typically end up partnering with 3-5 depending on my budget, their availability and rates. 
  3. After they complete and post the content, I will measure how it performs. I will review the data and then reach back out to the top 1-3 creators to start whitelisting from their account. When we do this, we pay another fee to allow us to whitelist and sometimes a small percentage of sales. Additionally, sometimes brands set up a single contract to get content and whitelist all at once — this works too!

In general, the better the creator/product/audience fit is, the better your numbers will be. Additionally, the better their posts perform organically, the better the whitelisted ads will do.  If you are a brand and you have never tried creator whitelisting before, you need to try it immediately. 

When we do this at Sharma Brands or Character, we typically see 10-50% better ROAS and lower CPAs and CPMs. 

Advertorials and Sponsored Editorial Content

The next big thing this brand did that boosted their performance was they ran Meta ads to advertorials. For those that don’t know, an advertorial is a combination of an ad and an editorial article. I’ve written about them many times before, and I have an agency fully dedicated to running advertorials for brands, Character.

Affiliate articles work really well, and it’s also why advertorials work well for brands — they are entertainment first, and then they’re a sales pitch. When you see an ad on Meta, you are immediately being sold on something, right? With advertorials, people are brought in through a story about moving into a new apartment in New York City, before they’re sold the cookware or the water filter that is our client. 

When this brand worked with Character for their advertorials, they saw a 17% increase in CVR, 8% higher AOVs, and 17% better ROAS. First party data, third-party validation = a concept called Secondary Presence. At Character, we have a network of publishers we work with and we own our own publishers (think of these as extremely conversion-optimized article landing pages) and normally see CPAs about 20-40% lower than a brand’s main ad account.

In total, the advertorial ad format now accounts for about 21% of Meta spend (up from 12% in Jan 2023) on this report. I would imagine that’s for a subset of brands, like within their disruptor program.

As far as the advertorials themselves, here’s some formats we start with to see some quick wins:

  • A first-person POV writing about the entire product journey — how they found it, ordering, unboxing, using, opinion, whether or not they recommend.
  • A comparison piece — comparing your brand to another well-known, legacy, big box player on the market.
  • An article that is secretly a  “10 reasons why” listicle.
  • A skeptics angle — Something like, “I tried the viral Nood hair removal tool — here’s how it actually worked”.
  • Anything educational that teaches the reader something while also entertaining them.

If you listen to My First Million, you’ve heard Sam Parr talk about the Hint Water Sweetie Article that I commissioned at Hint in 2017. I probably spent mid-7 figures just to that article. Character took all the learnings from our advertorial ad spend, as we pioneered it, and now does that for your favorite brands.

The last reason I’ll share why advertorials work, is the top of funnel generated is unmatched. These are “funnels” built for people who’ve never heard of your brand, so the content created has a wider net, which gets more people to consume and become aware of your brand. When this brand combined advertorials with creator whitelisting, the strategy lead to 45% of their incremental reach on Meta this year. 

Catalog Ads

Catalog ads might be the most underrated tactic with Meta, and they continue to do well for our clients. You can try on-brand DPA creative or something more interesting to make things pop. Bright colors, big text and a clear CTA is pretty much all you need. Marpipe makes it easy to do this in a canva-style editor.

Even if you only have a few SKUs, create bundles or leverage different variants with catalog ads. It works.

A few other things that are working: 

Lastly, the Meta team also mentioned a few other tactics that they see are working for this brand’s account but also other brands they monitor in DTC. Most of these are common sense but they are still worth mentioning. 

1. Utilizing celebrity testimonials in creative

The Meta reps said that this can lead to a 50% reduction in CPC if you use a well know influencer of celebrity testimonial directly in the ad creative. We saw the same CPC reduction with a verified TikTok account vs a brand account.

2. Use different models and even color palettes within the creative to reach new audiences

The same way an ad for AT&T is different in Missouri than it is for New York, Meta is recommending that advertisers also focus on creative that really speaks differently even if it’s off brand.

Be contextually relevant to whom you’re advertising.

3. Whitelisting works the best during sale periods 

Running general ads through whitelisting certainly works but if you can combine it with other tactics it can really supercharge performance. Meta recommends doing whitelisting when you have a big sale period to boost performance even more.

Okay, that’s it for this week on this email!

What other tactics are you seeing that are working that have driven significant performance improvements for you this year? Is there a tactic, channel, brand, or concept in marketing that you want me to write more about this year? 

If you send me an idea and I like it, I’ll send you lunch (aka a $25 Uber Eats gift card). Just reply here with the idea or DM me on Twitter, and I’ll let you know what I think!

Now onto some fun stuff…

Vendor of the Week:

OpenStore — The holding company that operates the largest number of businesses built on Shopify in the world.

Since inception, OpenStore has been doing things differently than others in its space. They buy businesses on Shopify with a goal to simplify the whole acquisition process. It starts with a free valuation on their site, and within 3-5 days, you have a non-binding offer to be acquired (you can just submit it to see what your valuation would be).

Today, OpenStore is a holding company with 100,000+ SKUs and a customer base of over 1.7m+ shoppers. They’ve guided nearly 50 founders to the finish line, paying out millions of dollars as they enjoy post-exit life or itch to start something new.

I recommend trying out their valuation tool to see what you get! Here are the criteria to submit: You must be operating for 6+ months, you must have $500k+ in profitable revenue, your customers should be majority in the US, and your product category can’t be restricted from Meta advertising. That’s all — click here to get a valuation!

Even if you don’t end up selling your business, OpenStore offers free consulting services to brands that are doing $500k+ in profitably revenue.

Click here to learn more about OpenStore!

That's all for this week

I hope today’s email was insightful to you and motivated you to think more about some tactics you can try to achieve better Meta efficiencies. I didn’t expect the usage of advertorials to double, but it makes so much sense in today’s crowded field of advertising. Whoever has the best content, will always win.

It’s Sunday, so I hope you’re feeling relaxed and excited for the week. I haven’t been at the office in a week, so as dorky as this sounds, I can’t wait to get to the office tomorrow morning. Get those 9 hours of sleep tonight, stay hydrated, and have an amazing upcoming week.

I’ll see you next Sunday!